When Rep. Chuy Garcia, D-Illinois, learned about the International Monetary Fund’s surcharge policy, it felt familiar: “To me, this looks like the business model of payday lenders here in Chicago, not an economic development agency.”

The IMF is the lender of last resort to countries experiencing economic difficulties. This emergency lending naturally comes at a cost: interest and service fees. But on top of these, the IMF levies extra fees on its most heavily indebted borrowers.

In theory, these “surcharges” dissuade borrowers from depending on IMF credit. In practice, they punish the countries least equipped to pay, siphoning vital resources from social spending and making it even harder to reduce debt to sustainable levels when a global debt crisis looms.

Despite the significant effects on borrowing costs, the IMF does not report how much countries pay in surcharges. It’s possible to estimate by using its projected country payments and subtracting other known fees. In a recent report by the Center for Economic and Policy Research, we found that in the next three years, the IMF will make $2 billion annually in surcharges — 36 percent of all charges heavily indebted countries will pay to the Fund.

What do these surcharges mean to the countries that pay them?

A year ago, one-third of Pakistan was under water — the consequences of a changing climate for which Pakistan bears little responsibility. But as it struggles to rebuild and the government fights for climate damage compensation, it is being forced to pay the IMF $142 million yearly in surcharges.

Before the war in Ukraine, Egypt depended on Ukraine and Russia for 85 percent of its wheat and 73 percent of its sunflower oil. Today, food prices are soaring, and the government has had to cut bread subsidies that have long been a lifeline for impoverished Egyptians. Yet, between now and 2025, Egypt will pay $306 million annually in surcharges.

The most salient case is Ukraine. While receiving significant budget support from the United States and its allies to counter Russia, Ukraine’s surcharge burden has grown the most of any country. Out of the $13.9 billion the IMF will levy in surcharges between now and 2031, nearly a quarter will be from Ukraine.

The list goes on. Sixteen countries pay surcharges, and many more soon could. By our analysis, seven — including Colombia, Morocco and Senegal — are on the verge of having to pay surcharges, and 16 more, including some of Africa’s biggest economies, are also at risk.

The IMF claims surcharges disincentivize reliance on the Fund. While this is a worthy goal, punishing the most indebted countries with additional debt is hardly the way to reach it.

With its political stigma and notoriously onerous conditions, turning to the IMF is already a last resort for developing countries. Moreover, the global economy is stacked against development in the best of times. In the current moment of destabilizing global economic crises beyond the control of developing nation policymakers, the logic of surcharges is particularly backward. Heavily indebted nations need relief, not punishment.

We found no evidence that surcharges work. Since 2021 — the last time these estimates were made — not only have surcharge payments increased but the projected period of debt servicing has grown considerably. The Fund has yet to offer evidence of surcharges’ purported benefits.

As Nobel laureate economist Joseph Stiglitz has pointed out, surcharges go “exactly against what (the IMF) is supposed to be doing. It’s supposed to be helping countries … not extracting extra rents from them because of their dire need.”

That’s why Stiglitz has joined a growing chorus calling on the Fund to suspend or eliminate surcharges, along with other top economists; leaders and officials from surcharged countries like Argentina, Barbados and Egypt; dozens of former heads of state; U.N. Secretary-General Antonio Guterres; and the U.N. Global Crisis Response Group, among others.

Last year, nine U.N. experts wrote to the Fund, concerned that surcharges undermine fundamental human rights (they have not received a response). And the House of Representatives, led by Garcia and Connecticut’s Rep. Jim Himes, passed legislation supporting surcharge suspension.

Ultimately, the fate of IMF surcharges — like much IMF policy under its infamously undemocratic voting system — lies mainly with the Biden administration. Heavily indebted countries like Ukraine, Egypt and Pakistan need relief from IMF surcharges. Until President Biden wills it, they have little choice but to keep returning to the world’s largest payday lender.